THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release April 1, 1992
FREEDOM SUPPORT ACT OF 1992 FACT SHEET
I. ONCE IN A CENTURY OPPORTUNITY TO CONSOLIDATE FREEDOM
The collapse of the Soviet Union provides America with a once-in-
a-century opportunity to help freedom take root and flourish in
the lands of Russia and Eurasia.
o Their success in democracy and open markets will directly
enhance our national security.
o The growth of freedom there will create business and
investment opportunities for Americans and multiply the
opportunities for friendship between our peoples.
Just as Democrats and Republicans united together to fight for
freedom during the Cold War, we must remain united to win the
peace.
II. PROVIDES NEEDED TOOLS FOR A MORE SECURE POST-COLD WAR ORDER
The "FREEDOM Support Act of 1992" provides a flexible framework
to constructively influence the fast-changing and unpredictable
events transforming Russia and Eurasia. The Act will:
o Mobilize the Executive Branch, the Congress, and the private
sector to support democracy and free markets in Russia and
Eurasia;
o Integrate comprehensively and target our efforts to address
military, political, and economic opportunities created by
the collapse of the Soviet Union, while sharing
responsibilities with others in the international community;
and
o Unlock Cold War restrictions that still hamstring the
government in providing assistance and impede U.S. business
from developing trade and investment with the new
independent states.
III. COMPREHENSIVE AND INTEGRATED PLAN HAS TEN MAIN COMPONENTS
1. The Act expands the authorities for humanitarian aid to
ensure that basic human needs are met.
o In cooperation with other donors, the United States
will continue to provide food and medical assistance to
reduce the danger of a humanitarian emergency and
instability.
2. The Act promotes nuclear safety and demilitarization to
prevent nuclear accidents and the spread of nuclear weapons.
o The bill would broaden the allowable uses of the $500
million appropriated for DOD last fall and provide
authority to support defense conversion, non-
proliferation efforts, nuclear weapons dismantlement,
addressing the "brain drain" problem, the relocation of
former Soviet military forces, and nuclear plant-
safety.
3. The Act expands assistance opportunities in building free
markets.
o These programs build on efforts of the peoples of the
new states to help themselves by privatizing and
creating free market economies. The bill would extend
Support for East European Democracy (SEED) Act programs
to cover the former Soviet Union.
4. The Act increases support for democratic institutions.
o This proposal helps us to expand programs; such as
"America Houses", to facilitate democratization and the
rule of law.
5. The Act improves access to credits for purchases of U.S.
food.
o The bill encourages the continuation of U.S. food
exports to the new states by taking into account their
commitment to economic reform in determining
creditworthiness for CCC programs.
6. The Act stimulates greater trade and investment by removing
the handcuffs of Cold War restrictions.
o The bill would enable the President to eliminate Cold
War restrictions which impede EXIM and OPIC activities
in support of U.S. firms trying to do business in the
new states.
7. The Act supports development of a private sector.
o The bill encourages American investment and trade, and
the formation of local businesses through enterprise
funds, small business programs# and management and
business training. It also supports further easing of
COCOM restrictions.
8. The Act leverages U.S. financial contributions through the
IMF.
o An IMF quota increase is needed to provide the
resources to back reform.programs in Russia and the
other new states. The U.S. contribution to the
increase, which does not require U.S. budget outlays or
add to the deficit, is matched by other contributions.
9. The Act supports a U.S. leadership role in a stabilization
fund.
o The bill supports the President's existing authority to
take a leadership role in organizing and supporting
multilateral efforts at macroeconomic stabilization.
The bill expresses the sense of the Congress for
support of up to $3 billion for U.S. support of
international currency stabilization fund or funds
should states adopt the necessary reforms.
10. The Act expands the American presence on the ground and
increases people-to-people contacts.
o The bill would facilitate both government-to-government
relations, the work of organizations such as the Peace
Corps, the Citizens Democracy Corps, and other groups
in promoting contacts between people.
IV. APPROPRIATIONS AND AUTHORIZATION
o At this point no authorization is needed to put in place the
framework for organizing our efforts comprehensively and in
an integrated manner.
o As for appropriations:
-- There is already a pending appropriations request for
$620 million for Congress to act on.
-- There is also a pending authorization and appropriation
request for $12 billion in BA for the IMF Quota
Increase which requires no outlays and does not affect
the deficit or the BEA.
o Authorization changes will also enable us to tap into
existing credit programs, EXIM, OPIC, thus making better use
of existing resources.
o Until we make full use of existing programs and we have a
better estimate of what additional resources, if any, are
needed, it is premature to discuss additional
appropriations.
Plans for Stabilization Funds for other CIS States
o It supports the President's existing authority to establish
a currency stabilization fund for other states should they
qualify.
o The size of these funds will depend on several factors: the
seriousness of reform programs by the states, the
availability of IMF resources, and the type of stabilization
program.
Status of aid to the former Soviet Union?
o To date the U.S. has pledged a total of $6.33 billion (FY
91-93). 60 percent of that total has been disbursed.
o CCC Credit Guarantees: As of March 30, the U.S. has shipped
over 24 million tons of food using over $3.5 billion in
guarantees.
-- The last CCC tranche of $250 million becomes available
April 1. All the $261 million in CCC principal and
interest that was due in first quarter was paid on
time. $1.1 billion is being announced with the
package.
o Food Grant: Operation Provide Hope has transported 2200
tons of food and medical supplies in 65 flights to 24
locations. Shipments of USDA Grant Aid began in early March
to Armenia, Moscow, St. Petersburg & Urals. $144 million of
$165 announced was committed and food purchased as of March
27.
o Medical Assistance: As part of the President's December
1990 Initiative $30 million worth of donated medical
supplies have been delivered to the former Soviet Union.
o EXIM has approved $172 million in loan guarantees and
insurance.
o OPIC has proposed agreements to all republics; we will sign
several agreements this spring, including with Russia.
o Trade and Development Program is open for business in the
CIS.
o Technical Assistance : $85 million program is underway.
CORE POINTS FOR CABINET MEMBERS
-- The President announced today a new and landmark program of
assistance to the new independent states that took the place
of the former Soviet Union.
-- This program is designed to support the struggle for freedom
underway in Russia, Ukraine, Armenia and the other now
states at a defining moment in modern history.
-- A victory for democratic forces creates the possibility of a
new world of peace for future generations. But defeat could
plunge us back into a more dangerous world.
-- The U.S. will play a major role in the global effort to meet
this challenge.
-- The President's program includes three major components:
-- First, the U.S. will join our G-? allies in a substantial
multilateral financial assistance package to support
Russia's reforms, including:
-development of a $6 billion currency stabilization fund to
maintain confidence in the Russian ruble;
-an effort to marshal roughly $18 billion in financial
support to Russia in 1992 to assist the stabilization and
restructuring of Russia's economy.
-- Second, the President is submitting to Congress a
comprehensive bill --the Freedom Support Act--to mobilize
the Administration and the Congress on a bipartisan basis
and the American people to support reform.
-This package would authorize a U.S. quota increase of $12
billion for the IMF, repeal existing Cold War legislation
that impedes trade, and broaden the President's authority
to expand U.S. assistance programs.
-- Third, the President will extend an additional $1.1 billion
in CCC credit guarantees to the former Soviet Union. We
will extend $600 million to Russia, and $500 million will be
made available to Ukraine and other states.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release April 1, 1992
AGRICULTURAL ASSISTANCE FOR THE NIS
The President today announced a series of additional measures to
assist the independent states of the former Soviet Union. These
include an immediate increase of $1.1 billion in credit
guarantees for the purchase of U.S. agricultural commodities.
Additional Credit Guarantees
Up to an additional $1.1 billion will be made available under the
GSM-102 program. Of this, $600 million will be available to
Russia and $500 million for the Ukraine Armenia and other states.
The Russian guarantees will be made operational in four monthly
tranches beginning on May 1. The other $500 million will become
available to the other republics provided they meet program
qualifications.
The GSM-102 program provides Commodity Credit Corporation (CCC)
guarantees of credit extended by private U.S. banks for the
purchase of U.S. agricultural commodities. The credits are
usually repayable over three years with three equal annual
installments of principal. The total amount of credit guarantees
made available since January 1991 when the first allocation for
the then Soviet Union was made is now $4.85 billion. Russia and
the other republics are fully up to date in repayments to banks
of credits guaranteed earlier by CCC. Since January 11 1992
these have amounted to over $270 million.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release April 1, 1992
MULTILATERAL FINANCIAL ASSISTANCE PACKAGE FOR RUSSIA
President Bush today announced U.S. support for a multilateral
financial assistance package to help Russia and the other new
states of the former Soviet Union transform their economies to
free market systems. There are three elements of this program:
o roughly $18 billion in financial support in 1992 to help
Russia stabilize and restructure its economy;
o $6 billion currency Stabilization Fund to bolster confidence
in the Russian ruble; and
o early membership for Russia and the other new states in the
International Monetary Fund (IMF).
The President has urged the G-7 to complete action on this
approximately $24 billion package by the end of April.
Financial Support
The United States is working with its allies and the
international financial institutions to marshal $18 billion in
financial assistance in 1992 to support Russia's economic reform
efforts.
Russia is already embarked on the path of bold market-oriented
economic reforms. The reforms taken to date are part of an IMF-
endorsed "shadow program" which does not involve financing.
Negotiations are now underway between Russia and the IMF with the
aim of converting the shadow program as soon as possible into a
full and comprehensive reform program which would merit IMF
financial support. These reforms would include reduction of the
budget deficit curbing inflation, privatization, and reform of
the agricultural and energy sectors.
$18 billion in financial support could be obtained from:
o $11 billion of existing and new bilateral commitments from
key industrial countries, including the United States.
Negotiations on specific contributions are underway among
the G-7 countries.
o $4-1/2 billion from the international financial
institutions, including the IMF, World Bank, and ABRADE.
o The remaining $2-1/2 billion in deferral of debt payments
owed to Western creditors.
Currency Stabilization Fund (CSF)
An integral part of Russia's reform program is an effort to
stabilize the ruble and bolster the public's confidence in it, by
making it freely convertible. To help achieve these objectives,
President Yeltsin has requested the creation of a currency
stabilization fund.
The major industrial countries recognize that a stable,
convertible ruble would have important benefits for the Russian
reform effort. Thus, the United States and the other major
countries are working together to establish such a fund for
Russia.
The Fund would total $6 billion, an amount equal to roughly 3
months of Russia's 1991 hard currency imports. Russian
membership in the IMF and compliance with a formal IMF program
would be a precondition for use of the fund.
The resources for the fund will be financed entirely by
activating the IMF's General Arrangements to Borrow (GAB). The
GAB consists of emergency credit lines to the IMF from the G-7
and other industrial countries. The U.S. share of the GAB is 25
percent. U.S. participation in the GAB, and the funds required
for the U.S. contribution, have been authorized and appropriated
by Congress. Use of the GAB involves no net U.S. budgetary
outlays.
Early Membership in the IMF
Russia and the other new states have applied for IMF membership.
The United States has strongly supported early membership for
them to promote market reforms and forge strong links with the
West. Russia, as well as some of the other new states, should
become members of the IMF by early May.
The IMF Executive Board is in the final stages of determining
Russia's terms of entry into the Fund, including the size of
Russia's quota, which will establish the basis for Russia's
representation, voting power and access to IMF resources. The
Board has agreed upon a 3 percent Russian quota share, which will
place Russia in the ninth position in the IMF.
It will soon forward membership resolutions to the IMF Board of
Governors. In turn, under standard IMF procedures, the Board of
Governors would have thirty days to cast ballots in support of
the resolutions. A vote by the Board of Governors requires a
quorum of one-half of IMF members with two-thirds of the voting
power, with approval by a simple majority of those voting.
The President has called for legislation providing for U.S.
participation in the IMF quota increase in order to ensure that
the IMF has adequate resources to meet prospective demands for
financing.